Bitcoin History: Timeline, Origins and Founder – TheStreet
Bitcoin’s history has been turbulent, to say the least, and right now we are in one of the most turbulent periods in its history as it has spent all of 2018 falling further and further from its peak value. nearly $20,000 in December 2017.
but something as uncertain as bitcoin (and cryptocurrencies in general) was never going to be easy. many tried a crypto digital currency before and could not fully crack it. Since bitcoin became a reality nearly a decade ago, there have been some ups and downs. For some bitcoin owners, that’s part of the appeal.
Reading: The downs bitcoin first
but how did we get to where we are today with bitcoin? How did it start, what were its ancestors, and what have been the unexpected twists and turns of the bitcoin journey? let’s take a walk through the timeline and find out.
Bitcoin itself did not exist until the late 2000s. Its origins, however, go back a few decades.
Specifically, we can trace it back to 1982. That’s when computer scientist David Chaum first proposed the concept of electronic money. Already concerned about privacy in the digital realm in the early 1980s, Chaum published an article titled “Blind Signatures for Untraceable Payments” detailing a new form of cryptography that he claimed could enable an automated payment system in the that third parties could not see the information. in the payment.
chaum tried to implement this idea, which would create a blind signature system, in 1990 by creating digicash. digicash was a company founded in amsterdam designed, like bitcoin, to create a safe and secure online currency. Chaum’s reputation as a brilliant mind attracted both employees and venture capital alike, but the product itself never caught on, and by the late 1990s, digicash was bankrupt.
still, chaum opened the floodgates for other cypherpunks with similar ambitions. In 1997, Adam Back invented Hashcash, a proof-of-work system that would be very similar to the one used by Bitcoin.
Click here for more information on proof of work.
This year saw the sudden rise of two cryptocurrency ideas. In late 1998, Wei Dai published an essay detailing his idea for “B-Money,” a cryptocurrency whose exchange reads similarly to what the blockchain would eventually become Bitcoin. the proof-of-work system creates the currency by solving a mathematical calculation and the money transfer is transmitted to the network.
that same year, nick szabo submitted a similar proposal for “bit gold”. Szabo’s reasoning for the altcoin was to create something that didn’t require a third party, like a central bank, to create or manage it. solving the proof of work gives you bits and the last bit of the chain is used to create the chain of the next transaction, similar to the bitcoin block chain.
none of these proposals, however, came to fruition.
those predecessors had tried and failed for two decades before. then in 2008 came bitcoin. in August of that year bitcoin.org was registered. Two months later, a white paper was published: “Bitcoin: A Peer-to-Peer Electronic Cash System.” the idea for the white paper had similar ambitions as the documents mentioned above: secure digital signatures, not requiring the use of a third party, proof of work, and combination of transactions to form a chain.
satoshi nakamoto, an unknown person or a group of people wrote the bitcoin document.
Click here to learn more about bitcoin’s elusive founder.
Just a few days after 2009, the first block of bitcoins, known as the genesis block, was mined. by Jan the first iteration of the bitcoin software was released on january 9th and on january 1st. on february 12, the first bitcoin transaction occurred when nakamoto sent 10 bitcoins ((btc) ) to prominent computer developer and programmer hal finney.
Towards the end of the year, in October, the new liberty standard publishes the first bitcoin exchange rate in the history of the young cryptocurrency, considering that $1 is worth 1309.03 btc. nakamoto released the second version of the software in December.
See also: Is Bitcoin a Good Investment in 2022? – Benzinga
with a set exchange rate, it was only a matter of time until someone tried to make an actual purchase with bitcoins. in May 2010, it happened. Florida-based programmer Laszlo Hanyecz sent 10,000 BTC to a London man in exchange for two pizzas, valued at a total of $25. this still valued a single bitcoin as a fraction of a penny, but with a purchase made, intrigued parties saw potential in the product. a couple of months later, the value of bitcoin finally broke the penny threshold
a pivotal year for bitcoin trading, the first bitcoin exchanges also appeared in 2010: the bitcoin market in february and mt. gox in july slush, the first mining pool, also successfully mined bitcoin for the first time that year. mining pools are where multiple miners combine resources to get bitcoin. In November, bitcoin’s market capitalization surpassed $1 million for the first time.
Not that everything has been good for bitcoin. someone spotted a vulnerability in the bitcoin protocol in october that allowed transactions without proper verification and exploited it, generating 184 billion btc. the transaction was soon cleared and the vulnerability was fixed.
making steady gains in value after finally passing the 1-cent threshold, a major milestone occurred in February 2011: 1 bitcoin was worth $1 for the first time.
Bitcoin began to receive press, both good and bad. Time magazine published an article about bitcoin for the first time, but the same year there was also an article about gawker detailing the silk road, the dark web drug market where bitcoin was frequently used as payment. the hype got people talking, and by June, bitcoin was worth more than $30. shortly after, it fell back to around $10.
also in june, mt. gox faced a serious security breach that compromised tens of thousands of accounts and their bitcoins. it would not be the first security problem mt. gox would take care of it.
click here for more information on mt. gox’s hack history.
even so, bitcoin was becoming an entity that was increasingly known by the public and interest in the cryptocurrency grew. This led to a rise in altcoins, other forms of cryptocurrency whose developers were either trying to improve on bitcoin or had created the digital currency for a different purpose. In 2011, Litecoin, now the seventh largest cryptocurrency by market cap, debuted.
click here for an overview of altcoins.
If 2011 was a hectic year for bitcoin, 2012 was calmer. One of the notable moments for bitcoin on its way to becoming the world’s leading digital currency was crossing the $100 threshold in April.
the price of bitcoin experienced its share of ups and downs in 2013, but it surpassed a value of $1,000 for the first time and was becoming the most recognizable and successful wallet and exchange available.
and then…it stalled for a while. Quickly, in January 2014, it dropped below $1,000 and struggled below the key level for a few years. Some notable things happened, like the crypto exchange mt. gox filed for bankruptcy and was shut down, but this period mostly saw bitcoin go up and down a bit without reaching its peak.
However, 2017 was the biggest and most active year for bitcoin. after spending 2016 desperately trying to get back up, 2017 was when it finally reached and surpassed the $1,000 mark. kept going up. in June, bitcoin was worth over $3,000.
Still, some bitcoin users were also frustrated with the network around this time. The growing number of bitcoin miners meant higher fees and more time spent processing transactions, leading some to want an increase in block sizes. in august, this led to bitcoin cash (bch) being created via a fork in the network. bitcoin cash is now the fifth largest cryptocurrency by market capitalization.
Click here to learn more about blockchain forks.
Still, for the rest of 2017, bitcoin was on the upswing. by October, it was over $6,000. It ended November at almost $10,000, and at the end of December, bitcoin hit a high of $19,783. more and more people and companies started to follow the trend as the price kept rising. unsurprisingly, it would not continue with such breakneck growth.
See also: Hash Rate: Definition, Measurement, Why It Matters
2018 has been a tough year for bitcoin users, especially those who continued to assume the price would continue to rise. many sold their bitcoins while they could, and the price has dropped steadily throughout the year. At the time of writing, the bitcoin price is $6,542.78, a decrease of 67%.
Need more information on some of the concepts mentioned in the timeline? here’s what you need to know.
what is proof of work?
Proof-of-work is the system that the bitcoin blockchain network uses to create and combine blocks. When the computer on a network needs to use proof of work for mining, it needs to solve a complicated math problem. if one computer (called a “node” on the network) successfully solves the problem, then it must be verified by the other nodes on the network. if it does, the transaction is verified and complete, and the miner whose node resolved it is rewarded with bitcoins.
Proof of work is an incredibly controversial method. it is a secure method of verifying transactions, but it requires a lot of power. As more and more people started mining bitcoin, more high-powered mining hardware and graphics processing units (GPUs) were created to give people an edge. this consumes vast amounts of energy, and with so many miners of bitcoin and other cryptocurrencies, many are concerned about the environmental ramifications. some cryptocurrencies are testing a proof-of-stake method, which consumes much less power.
who is satoshi nakamoto?
satoshi nakamoto is simply a pseudonym. the person behind, however, remains a mystery.
It remains such a mystery that some think it is more than one person, doubting that a single person could create something as complete as the bitcoin network. still, others have raised the possibility that it is a single person, and there are many theories as to who that single person could be. none have been verified.
who are the people that some people think could be satoshi? Some of them have already been mentioned in this article, such as Bit Gold founder Nick Szabo, whose ideas were remarkably similar to those of Bitcoin. others think he may have been hal finney, a notable developer and the person nakamoto sent bitcoins to in the first bitcoin transaction in 2009.
It is speculated that a person is satoshi because they literally tried to say they were. That person was Craig Wright, an Australian businessman who not only publicly claimed to be Satoshi Nakamoto but promised that he would provide proof of it. So far, he has not provided this proof.
mt. gox tricks
At one point in bitcoin’s history, it could be argued that mt. gox, a tokyo-based bitcoin exchange, was the largest exchange. but in 2014 it was gone.
mt. gox was plagued with security issues that would become the undoing of it. The 2011 hack came just a few months after Mark Karpelès, a French businessman, bought the exchange. The hacker, by gaining access, artificially altered the face value of bitcoin down to a penny and then transferred 2,000 btc from mt. gox client accounts on the exchange. these bitcoins were sold, and in the brief moment when bitcoin seemed worth a single penny, 650 were bought.
This was a brief but serious setback for mt. gox, but the exchange implemented new security measures and stabilized, growing to become the largest exchange in 2013. However, these security measures were not as effective as they had hoped. in early february 2014, mt. gox stopped bitcoin withdrawals. a few weeks later, all trading stopped.
it turned out that mt. gox has been pirated for years. Overall, the hackers took 100,000 bitcoins from the exchange, and more than 744,000 from mt. gox customers. the company was insolvent and the exchange filed for bankruptcy.
You may have only heard of bitcoin in the last few years, but cryptocurrencies developed a passionate following even when they were smaller. some of those passionate people also took offense to some elements of bitcoin, and others thought the blockchain behind it could be used for other purposes.
This gave birth, at this point, to hundreds of new cryptocurrencies that still exist today. 2011 saw the birth of litecoin, a bitcoin-like cryptocurrency that advertises itself as having significantly faster transaction speeds than bitcoin. this would also be a major selling point for ripple and its cryptocurrency xrp, although ripple seeks to help banks and financial institutions.
Bitcoin remains the cryptocurrency with the largest market capitalization by a wide margin. other altcoins mentioned above (litecoin, xrp, bitcoin cash) are also in the top 10. in second place is ethereum and its ether cryptocurrency. ethereum stands out from the rest because its blockchain is used to store data as smart contracts.
A hard fork in the bitcoin blockchain network creates a major change in the network protocol, such as the creation of bitcoin cash to increase the size of blocks on the network. only nodes with updated network can validate transactions.
Changes made to the protocol could be for reasons like bitcoin cash, where many thought the idea was practical, or could be used for a necessary purpose, like undoing transactions made by a hacker.
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